Simon Penaluna, assistant IT director at Peaks & Plains Housing Trust, explains how the housing provider has brought about a revolution in arrears management. Its in-house developed system, which won ‘Most Innovative IT System’ earlier this year at the Housing Innovation Awards, incorporates original thinking, improved performance and value for money. The fact that its collection rates have risen and its arrears have fallen, when most housing providers are facing rapidly increasing debt, speaks for itself.
Good arrears management and maximising rental income collection have always been high priorities for Peaks & Plains, but in 2012 the likely impact of Welfare Reform and in particular the introduction of the ‘bedroom tax’, moved them to the top of our agenda. The reforms meant that many of our tenants would lose some of their housing benefit, potentially leading to a significant rise in rent arrears.
There was a very good business case for developing a system that would result in better income collection and our ICT team rose to the challenge. Initially, they looked at off the-shelf technology but soon felt that ‘home-grown’ software would offer a much better, value for money solution.
The team’s information support officer took the lead in designing bespoke software and our Arrears Management Tool (AMT) was developed. The new technology, which was introduced in October 2012, uses complex algorithms and key triggers, such as changes to housing benefit, to identify tenants needing support and to prioritise debt.
No longer fit for purpose
Originally, when it came to the reasons for tenants falling into arrears and defining the level of support that they needed, conclusions were drawn and decisions were made based predominantly on staff knowledge. This had worked well enough over the years, but with the advent of Welfare Reform, this way of working was simply not suitable. A new approach was needed if arrears were not to rise significantly and collection rates to fall.
Great teamwork was a vital ingredient in developing our new approach to arrears. Our ICT team worked very closely and successfully with our income and service improvement teams, developing a good understanding of the intricacies of arrears management. At the same time, our income and service improvement teams gained a good grasp of how the new technology worked.
New way of working
With the AMT, our ICT team came up with an innovative system that can capture, replicate and display arrears management intelligence. Through this new way of working, workloads can be easily shared and staff can readily support one another, focusing on priority tenants such as those receiving reduced housing benefit due to the ‘bedroom tax’. Our staff now have a much better knowledge and understanding of the tenants they are working with as well as considerably more time to give them the help they need.
Arrears management revolution
From the very beginning, we felt that our new approach to arrears would play an important part in helping minimise the negative impact of Welfare Reform and the ‘bedroom tax’ on both us and our customers. In reality, the effectiveness of the AMT has exceeded everyone’s expectations, leading to a revolution in arrears management. The introduction of the AMT has meant more efficient use of staff resources and has led to a reduction in the volume of cases being managed manually by our income team, who can now focus on cases identified as needing action.
Since the system went live in October 2012, income team members deal with, on average, only a third of the tenants that previously made up their caseloads. As a result, the number of home visits has doubled and the number of telephone calls to tenants needing help has trebled.
Increased rent collection rates
The freeing up of staff time has meant that our income team can now focus more on collecting ‘live’ arrears, leading to improved collection rates and a reduction in the loss of rental income. As a measure of how successful this is proving to be, rent collection rates from October 2011 to September 2012 have been compared with collection rates from October 2012 (when the AMT was introduced) to September 2013. Having adjusted the figures to take into account our 6.8 per cent April 2013 rent increase, this translates into an average of 1.14 per cent extra rent collected, equating to approximately an extra £23,000, every month, over the 12 month period.
Bucking the trend
The value of our home-grown AMT technology cannot be overstated. The fact that our rent arrears have fallen, at a time when most social housing providers are facing rapidly increasing debt, speaks for itself. Within three months of the AMT going live, our rent arrears fell from 1.7 per cent to an all-time low of 1.5 per cent, putting Peaks & Plains in the upper quartile for arrears management and establishing us as a ‘top five’ performer. Our figures are undoubtedly bucking the trend, as evidenced by survey results released by Inside Housing, CIH and Capita. The results show that rent arrears across the country have already increased dramatically as a result of the ‘bedroom tax’ and Welfare Reform.
One in 10 of the 459 housing providers surveyed said that their organisations had seen arrears increase by more than 20 per cent, while a further 41 per cent reported a rise in arrears of more than 5 per cent.
Value for money
We have no doubt that our AMT technology represents really great value for money. There was no financial outlay involved as we decided not to buy-in software but to go down the route of developing our AMT in-house. The development of the software was resourced internally, with no additional funding input. Over a six month period, our ICT team’s information support officer spent three months working on the project while, at the same time, developing our iPhone app.
As the AMT was developed in-house, we are realising annual savings in the region of £30,000 by not having to buy-in or upgrade our arrears management software. Furthermore, as our AMT is home-grown, it is very easy to make continuous improvements to the system with few cost implications.
Potential to generate income
Great interest has been shown in our AMT by other housing providers and our ICT team have taken on the role of ‘salesmen’, demonstrating and selling the merits and benefits of the new technology. A number of housing providers, as well as the North West Income Best Practice Group, have visited our head office in Macclesfield to see the new technology in action. There is therefore great potential for the AMT to generate income for Peaks & Plains.
A success story
For Peaks & Plains, AMT has been a huge success story. Our ICT team have won ‘IT Team of the Year’ in the Housing Hero awards, have proven themselves a vital part of the success of the Trust, and continue to develop innovative in-house solutions to practical problems.
Finally, and most importantly, AMT has benefitted the people who matter the most, Peaks & Plains’ tenants. The new approach to income collection means we can provide them with the help and support they need in these challenging times.
Simon Penaluna is the assistant IT director at Peaks & Plains Housing Trust.